China’s Postal Savings Bank files for potential $10 billion IPO

HONG KONG (Reuters) – State-owned Postal Savings Bank of China (PSBC), the country’s largest bank by number of branches, has filed for a Hong Kong initial public offering (IPO) seeking to raise as much as $10 billion, Thomson Reuters IFR reported on Thursday.

The filing of the preliminary IPO prospectus sets in motion what is expected to be the world’s biggest new listing in about two years, valuing the bank at about $50 billion, IFR said, citing sources close to the deal.

Share sales in the region have been hit by volatile equity markets, China’s slowest growth in 25 years and growing uncertainty after Britain’s vote to leave the European Union.

PSBC, which has more than 40,000 branches nationwide and is considered to have a much lower ratio of bad loans than rivals, was set up as a deposit-taking bank in 2007, using the network of the former postal savings bureau.

The lender plans to sell up to 13.9 billion Hong Kong shares and use the proceeds to bolster its balance sheet, according to a statement on the website of the China Banking Regulatory Commission on June 24.

If the IPO of PSBC, which has about 500 million clients or nearly half of China’s population, hits its fund-raising target, it would be the biggest market debut since Alibaba Group’s record $25 billion listing in September 2014.

While most large peers including Industrial and Commercial Bank of China and Agricultural Bank of China trade at prices below their book value, PSBC plans to sell shares close to book value, sources have said.

Because of its focus on small loans, the bank has a cleaner balance sheet than many other Chinese commercial lenders saddled with bad debts from property developers, steelmakers and other industrial conglomerates, analysts and investors have said.